Taking cash from pension at age 50

[Big50]

Hi,

I have seen many posts on here dealing with taking cash from pension plans at 50 but I am so unfamiliar with the subject of pensions that I need to ask some basic questions in case my limited understanding is incorrect.

I am rapidly approaching the Big 50, am self-employed, and have a defined contribution pension from my last employer (left 5 years ago). My pensionable salary is €60 k an the transfer value of the pension is €160 k.

I understand I can transfer the pension to a Buy-Out bond and take part of it as cash on my 50th birthday - is this correct?

If correct, how much can I take as cash and what is the taxable situation on this?

I have other pension entitlements from previous employments in other parts of the world, so I am not too worried about what happens when I retire - the money from this Irish pension would be extremely useful right now as I am self-employed and it's been a tough few years.



Please do not refer me to a suitably qualified financial advisor as my experience with these guys has been negative and I would prefer to stick with the advice of the good people on this website for now.


thank you in advance,
50

 

[LDFerguson]

Hi Big50,

You don't necessarily have to transfer to a Buy Out Bond to access your fund at age 50. Assuming the scheme trustees agree (and they should, given that it's a DC scheme and you've left employment) you can simply take early retirement from the scheme itself. A Buy Out Bond doesn't change your retirement options - it just puts the fund into your control.

The part of the fund you can take as cash is determined by how many years service you had, the Normal Retirement Age and your salary in your old employment. The pension scheme consultants should have all this information on record and should be able to work this out for you on request. Ask them to calculate your tax-free lump sum based on your taking early retirement at 50. (I'm assuming for this paragraph that you were not a shareholding director of your former employer.)

The cash element is tax-free, but you must also buy a pension with the balance of your fund, which will be taxable.

Liam D. Ferguson
(Being a good person of this website and a suitably qualified financial advisor are hopefully not always mutually exclusive. )